Bitcoin ETF Sparks Debate Between Legitimacy and Investment Purism

The U.S. Securities and Exchange Commission’s (SEC) nod to Bitcoin ETFs has circled through the crypto sector. It has sparked both optimism and some skepticism.

Gerald Goh, co-founder and CEO of crypto bank Sygnum Singapore, is positive. Goh views the SEC’s approval as a key marker for Bitcoin’s legitimacy. The official recently said in an interview that it paves the way for institutional players to embrace crypto, potentially ushering in its mainstream adoption.

Contrasting this enthusiasm is “Shark Tank” personality Kevin O’Leary, who remains unimpressed. During a Fox Business interview, O’Leary, a self-professed Bitcoin purist, dismissed the idea of investing in ETFs. He questioned the rationale behind paying additional fees for ETFs, asserting that they offer no value to long-term Bitcoin holders like him.

Bitcoin ETF debate reignites

Investing in Bitcoin through ETPs carries a blend of advantages as an investment. But it has its drawbacks. ETFs make access easy for traditional investors who do not handle wallets.

There is enhanced legitimacy, which provides for potential broader market participation. Bitcoin ETFs don’t need to directly manage the king coin.

Additionally, they allow for integration into diversified portfolios with market oversight. And naturally, it offers a sense of security for some investors.

Additional costs are discouraging

With BTC ETF players, the major competition is around administration fees. Any management fees erode investor profits.

Additionally, funds may not perfectly track the price of Bitcoin due to the structure of the fund. 11 of the approved Bitcoin ETFs are seeing different levels of fund flow and assets under management (AUM) due to this difference in structure.

For Bitcoin purists, ETFs might not mean holding the actual cryptocurrency. In this case, it is bitcoin. And therefore, the freedom of a decentralized system is overshadowed by the security of traditional financial products.

ETF investors also do not get to choose the storage and security methods for their digital assets.

BTC ETF vs BTC price

Cryptocurrency analyst Michaël van de Poppe recently noted the impact of the Bitcoin ETF on the market.

Van de Poppe pointed out that while the ETP initially led to a price drop from $48,000, investors shouldn’t judge the launch by it.

According to him, the price dip is a short-term effect due to investors shifting from holding actual Bitcoin to investing in the ETF.

He viewed this shift as temporary sell pressure and remained bullish on the long-term prospects, predicting that Bitcoin’s value would exceed $200,000. His advice to investors has been to “buy the dip.”

Also Read: Bitcoin ETF Stumbles: CNBC’s Neuner Terms Launch a Failure